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Tuesday, 27 January 2015

I conclude that Big Data, while potentially powerful and useful, is not a universal solution. I also explain why the concept of super-governments ruling their citizens or of companies steering their customers in a top down way will not work on the long run. To master the growing complexity as we network our world, as cultural evolution progresses, and as economic markets differentiate, we need a more decentralized approach. The “Internet of Things” will empower self-organizing systems that create socio-economic order and functionalities of many kinds in a bottom-up way. This approach can solve the problem of over-regulation, benefit from diversity, and promote innovation, collective intelligence, societal resilience, and individual happiness.

The world is changing at an ever-increasing pace. This has called for new approaches to support decision-making. In the past, whenever a problem had to be solved, the best thing was to ask some experts. These would go to the library, collect up-to-date knowledge, and supervise PhD students helping to fill existing knowledge gaps. But this is a slow process. In the meantime, whenever people have a question, they ask Google or consult Wikipedia, for example. This might not always give the correct or best answer in the world, but it delivers quick answers when we are interested in them, and on average the so resulting decisions might be better than the decision we took in the past. It is, therefore, no wonder that politics and business are increasingly excited about the Big Data approach. This has even fueled the dream that, finally, there will be a universal approach to answer all the questions one might have and to take the best possible decisions for the world. Why should one, then, still ask experts or the citizens, if there are intelligent machines that can figure things out and are more comfortable to handle? One would just have to collect as much data as possible and evaluate them with powerful machine learning algorithms. In fact, if things were as simple as this, I would perhaps consider to agree with a "wise king" ruling the world, using a Big Data approach, but I have some serious reservations about this approach.[1]

Top-down control will fail

Of course, I recognize that there are many hierarchically (top-down) organized systems in our world, and therefore I don't question that they can be useful at times, depending on the respective circumstances. For example, elementary particles form atoms, atoms form chemical compounds, these form solid bodies, and together they may form a planet, which is part of a planetary system, and a galaxy.

Biological cells create organs, and together they may form a human body. Humans again may organize themselves in groups, cities or organizations, and nations. However, the stability of such hierarchies is based on two important principles: the forces are strongest on the bottom, and the changes are slowest on the top. But this is not anymore true in today's societies, where laws are probably made more quickly than companies and people can adapt. On the long run, this is likely to cause a systemic instability. While it is known that delayed adaptation can destabilize a system, we are also trying to push many of our problems into the future (e.g. public debts, implications of demographic change, nuclear waste, climate change). This creates a concrete danger for our society to get out of control, and therefore we need a new approach – one that generates a resilient, more crisis-proof society.

Wouldn't new information systems allow one to rule the world more successfully? Yes, to various extents, depending on the approach. In order to run a country or company well over a long time, close-to-optimal decision-making is needed. The question is, how to take such decisions: top down, bottom up, or by combining both? In previous chapters I have shown that, for a number of reasons, a supercomputer to optimize the world in real-time, a Crystal Ball to predict the future, and a Magic Wand to manipulate it will not work perfectly enough. Trying to create such technologies is dangerous. An information and communication system aiming to collect all data in the world may certainly produce a powerful tool. Nevertheless, we should better not build it, as we don't know how to use it well, and it's unlikely we ever will.

Big Data analytics comes with a number of problems such as over-fitting, spurious correlations, and classification errors. But as a powerful information system will have large-scale systemic impacts, a single mistake can be highly destructive or even endanger humanity. Just imagine the power of such information and communication systems to get into the hands of a misguided group of individuals or a criminal organization. This could easily turn our societies into evil regimes. Hence, wise and caring political leaders as well as companies should better abstain from trying to build an all-knowing and almighty information system. The more powerful information systems are the more safety measures are needed to protect companies and people from potentially resulting harm. This calls for a suitable combination of encryption, decentralization, transparency, participation, reputation systems, community moderation mechanisms, and legal protection.

Surprisingly, however, not even a decision-maker with the very best intentions and all the data and technology in the world could take optimal decisions. Although computational power grows exponentially in time, the complexity of our world is growing even faster. Therefore, no single person, company or institution will ever be able to optimize our quickly changing world in real-time.

Supercomputers cannot even perfectly optimize the traffic lights of a big city in real time. This is because the required computational effort explodes with the size and complexity of the system. Possibilities for optimal real-time top-down control will even decrease, as man-made systems become increasingly complex, such that the relative lack of computational power grows with time. Despite this, we have so far attempted to "control complexity" in a top-down way by thousands of laws and enforcement institutions. While this approach has served us well for a long time, it is eventually coming to its limits. The top-down approach has produced over-regulation and high debts, while many problems haven’t been solved. In fact, we seem to have more problems than ever.

Time for a new approach

Due to many instances of misuse, attempts to collect huge masses of data have undermined the trust of people in a conventional Big Data approach. But the digital revolution does not mean that we must loose human rights, free decisions, dignity, and democracy. There are better ways to create social order and socio-economic well-being with future information systems than by massive data collection of sensitive personal data and surveillance of all kinds, from speed control to Internet control and, one day, perhaps even thought control.[2]As I have pointed out, diversity and independent decision-making are important preconditions for collective intelligence, which is needed to turn the complexity of the world into our advantage. The consideration of multiple perspectives is key to master our future in an increasingly complex society.

We should, therefore, build our society on a trustful, symbiotic relationship with the citizens, customers, and users. The goal should be a society of well-educated and responsible people that is based on the principles of respect, "live and let live," and participatory social, economic, and political opportunities for everyone.

Locality as success principle of the universe

As Albert Einstein (1879-1955) pointed out, "we cannot solve our problems with the same kind of thinking that created them.” Fortunately, an alternative, superior approach exists. A distributed, information-based management of complex dynamical systems is more efficient than classical top-down control. It is based local real-time interactions (where "locality" is not necessarily restricted to "real space").

In our universe, locality is an important success principle. Most physical forces are extremely short-range. Locality is also a crucial principle underlying many self-organization processes in socio-economic systems. It is, for example, a precondition for niches that support diversity and innovation. As we have seen in a previous chapter, local interactions promote the evolution of cooperation and social preferences, too. One might even say that the most interesting socio-economic phenomena are based on co-evolutionary processes that happen on the meso-level (i.e. on an intermediate scale between the individual system component and the entire system).

So, we should better use the success principle of locality for us. But what implications does it have for the future management of our complex world? We need to pursue an approach based on distributed control and self-organization. Self-organization may be seen as another word for the “invisible hand” phenomenon. But it doesn't automatically produce good outcomes. Phenomena such as phantom traffic jams, crowd disasters, financial crashes, or "tragedies of the commons" show this well. However, these phenomena are now well understood – there are mathematical models or computer simulations reproducing them. And these tell us that it’s often possible to avoid negative outcomes of self-organization: by changing the institutional settings or interaction mechanisms, or just by operating the system in a different parameter regime (e.g. at lower density).

How societies will be "ruled" in the future

Unfortunately, in the past, humans have been pretty bad at specifying suitable interaction rules, and they haven’t even found good ways to formalize them. This problem has so far been standing in the way of self-organization and decentralized approaches. However, the main point to be considered is that every actor, be it a company or an individual or another entity, should have to pay a fair compensation for the externalities produced (be they harmful emissions, toxic waste, noise, or other things that affect others or the environment in a negative way). Social Information Technologies can help to do this. Even where the invisible hand used to fail in the past, we can often make it work in the future, by considering the externalities. Three hundred years after the inception of the "invisible hand," the enabling technologies for this are just becoming available!

In fact, the sensor networks establishing the "Internet of Things," will for the first time in human history enable us to realize Adam Smith's (1723-1790) brilliant vision of self-organizing systems. This creates an entirely new opportunity to make our increasingly complex world manageable again in a way that is compatible with the complexity of our world. But we need a paradigm shift in the way we think about our world and the way we govern it!

Using the sensor networks of the "Internet of Things," we will soon be able to perform real-time measurements of the data we need, and it is often not necessary to store them. The collection of as much data as possible, which is at the core of today's Big Data approach, is therefore replaced by a tailored measurement approach. Such real-time measurements (without long-term data storage) are sufficient to enable the real-time feedback required for self-organizing systems. As I have underlined before, one can anyway not process all the data currently stored and storing more data does not necessarily mean better results, so why should we keep such data in the first place?

However, to fully unleash the power of information for self-organizing systems, we will have to go beyond the brute-force machine learning approach currently applied to Big Data. Namely, we must learn to combine knowledge from the computer, complexity and social sciences. So far, this combination of knowledge and skill sets has often been lacking. The Silicon Valley is too technology-driven, while the social sciences tend to underutilize technology. Finally, the potential of complexity science for real-world applications is just being discovered...

Waking up from the Big Data dream

It is surprising to hear that decentralized approaches should be able to outcompete centralized ones. How is this possible? Couldn't we emulate a decentralized system, i.e. operate a centralized system like a decentralized one? This seems plausible, but it would certainly be more expensive. Moreover, it's not obvious what kinds of data are relevant, and which ones obfuscate the truth. In contrast to what the Big Data thinking often suggests, less data can sometimes be better. For example, I discussed earlier that it is possible to predict epidemic spreading with a model-based empirical approach better than Google Flu Trends can do it with Big Data. This is, because too much data produces problems like "over-fitting" or "spurious correlations." In other words, one might get results that are not relevant (such as random patterns). These would be misleading, producing bad decisions.

Furthermore, a centralized approach often ignores local knowledge, because it’s usually not possible to centrally process all local information. Processing power and data transmission rates are still limiting factors, and they will always be. Such local knowledge, however, allows decentralized "bottom-up" approaches to perform well.

In other words, the Big Data dream, which promises governments and some companies knowledge of everything and power by knowledge, turns out to be a dangerous illusion. Big Data is far from being a universal tool to fix the world. The Big Data approach was not even able to fix the problems of the Silicon Valley. It is, therefore, also time to wake up from this dream and to say goodbye to the flawed Big Data approach of mass surveillance, too. The terrible terror attacks in Boston and Paris have shown that surveillance can't guarantee 100 percent security. It is also known that extremism and crime are often results of lacking socio-economic participation, integration, and respect.[3]

Therefore, control is not a good substitute for trust – "trusting" is "not knowing." Whoever has power must pay attention to avoid anything that could violate widely accepted moral, cultural or legal values, as this can seriously undermine legitimacy and trust. In fact, mass surveillance has considerably undermined people’s trust already. For example, two thirds of Germans are afraid that their personal data are misused by companies and public authorities.[4] More than fifty percent of all Germans even feel threatened by the Internet. On the long run, this can substantially weaken the credibility of companies and governments. This might even produce a legitimacy crisis and a loss of power.

Note that the power reached by weapons and other coercive means tends to be destructive and often counter-productive: it undermines the self-organized social order that is based on the local norms and cultures. Therefore, power based on force tends to cause trouble and is usually not stable for long. Constructive power, in contrast, requires the willingness of people to follow their leaders. It is based on a trustful, symbiotic relationship, in which all involved parties, including the citizens, benefit. We, therefore, need suitable institutions that help us to find and maintain a proper balance between different stakeholder interests and support the self-organization of our society and economy (see Information Box 1).

The secrets of self-organization

At times, self-organization seems to be almost magic. So, how does it work? It's mainly based on mutual adaptation processes. These might be imagined similarly to the way the universe works as a result of physical forces. However, it's hidden socio-economic forces that govern the structure, dynamics, and function of our society (and these may change over time as a result of innovations). These forces relate to the interaction rules in the system, and further mechanisms serve to reach a compliance with these rules. For example, social norms – the rules behind our everyday lives – are maintained by "peer punishment" of those who deviate from them.

Complementary, money is an important reward mechanism, but not the only one (social reward mechanisms can be even more effective). The weakness of today's money is that it is one-dimensional, while it takes several control parameters and, therefore, a multi-dimensional reward or exchange system to manage complex systems in the future. I have shown that nature, in fact, has created humans in a way that makes us responsive to many different rewards. Interestingly, the virtual world now offers new possibilities to create incentive mechanisms: ratings, reputation systems, and gaming scores are good examples.

Finally, for self-organization to work well, one must find and apply suitable sets of rules. But how to determine these rules? Top down or bottom up? Over time, top-down regulation has produced the problem of over-regulation, and it also promotes inequality.[5] The approach of self-organization, in contrast, doesn't have this problem, and it has the further advantage that it creates options rather than compromises (see Information Box 2). It enables local rule sets in favor of socio-economic diversity, innovation, happiness, and systemic resilience. The approach is similar to niches in nature. However, favorable self-organization requires the ability to find and implement suitable sets of rules, which is not trivial at all.

Fortunately, there are recently some new tools, which can help us to identify suitable institutional settings and interaction rules that support the self-organization of desired functionality. For example, we can do experiments more easily. In fact, we may vary and test new rule sets in advance – either with computer simulations or in interactive multi-player online worlds, or both. Compared to today's policy-making, this implies several important differences: 1. computer simulations and Interactive Virtual Worlds can be used as a "policy wind tunnel” to explore the implications of rule sets in advance; 2. no new rules should be implemented without prior testing; 3. alternative sets of rules can be continuously generated and tested.

Moreover, considering the importance of diversity for innovation, societal resilience, economic well-being, and the happiness of people, one should not implement a single rule set homogeneously all over the world. The self-organizing society should be rather imagined as a set of co-existing, but interacting self-organizing systems governed by their own rule sets. Social Information Technologies would then help us to master this diversity and benefit from it – by making different rule sets understandable and mutually compatible. Altogether, this can create a rich "socio-economic ecosystem," allowing for new ideas and niche markets. I expect that the underlying principle to “live and let live” would also be able to reduce conflict and extremism, which result when minorities are not provided with enough opportunities to personally and culturally unfold and express themselves.

Where may the digital revolution take us?

It's important to understand that the digital revolution requires us to see the world with different eyes, as entirely new principles will apply. The future world is not well characterized by political categories such as "left" or "right." It will have its own logic, and moving "forward" is the best way of describing it. Even though the digital era will be different and it hasn't been here before, one can already see it coming. One can analyze the new trends underlying the digital revolution, and draw conclusions by studying the transformative "forces" at work.

It is entirely possible that we will go through a phase based on a super-government approach driven by Big Data. However, my conclusion is that future societies will eventually build on advanced self-organization approaches, enabled by "Internet of Things" technologies operated in a decentralized way. This will happen, because such systems are potentially more effective and efficient, promoting innovation, flexibility, adaptiveness, and resilience, in short: they are superior. Self-organization is enabled by real-time information and feedbacks, and it unleashes the potential of local expertise and collective intelligence, based on coordinated bottom-up engagement.

The best of all worlds

One might say that self-organization as described before combines the best elements of democracies and market systems, and establishes a synergy between economic and social needs. The approach is well compatible with human rights and constitutional principles, and it has nothing to do with anarchism. I absolutely recognize the importance of socio-economic order for prosperity and well-being. Self-organization in the sense I am using it does not mean that we can just choose the rules that please us. We must rather find suitable rules that serve a certain functionality or purpose. Such rules typically require us to consider the externalities of our decisions and actions, and to compensate others for negative externalities.

The self-organization approach is also very different from communism or socialism. First, it implies as little top-down planning and control as possible. And second, it builds primarily on enabling individuals to help themselves and to cooperate more successfully rather than on attempts to reach equality by redistributing wealth. The self-organization approach is based on self-determined decisions, but within an information-based framework that promotes collective intelligence and better decisions by everyone. It builds on awareness to promote responsible, other-regarding behavior.

Suitable reputation and merit-based mechanisms are powerful principles to support cooperation, responsibility, and better socio-economic outcomes in a globalized world. If properly implemented, the future self-organizing world will be more effective and efficient than our current system. Today, top-down regulation still struggles with bottom-up self-organization, thereby causing frictional losses, conflicts, and high costs. In fact, I believe we will not much longer be able to come up for the expensive institutions needed for our current, over-regulated system. Most industrialized countries have reached historical heights in public debt levels in the order of 100 or 200 percent of their annual productivity, or more. Nobody knows how we should ever be able to pay for this – and for even more regulation.

Understanding and following the principles described in this book allows us to unleash the innovative potential of our society, to exploit the new opportunities of the digital age to come, and to better manage the 21st century challenges ahead of us, such as global financial and economic crises, global epidemic spreading, global conflict, globally organized crime, or global environmental and climate change. The Economy 4.0 will come with more creative work, personalized products, a spirit of sharing, and a collaborative information ecosystem that will overcome some scarcities of the past. Who could afford not to pursue this approach?

In the next decades, I expect the emergence of a Digital Society superior to what we currently have in most places of the world. In the previous chapter, I have given examples showing that a Participatory Market Society is already on its way (the "sharing economy" and the quickly growing "makers community," for example, reflect this well). The Participatory Market Society will build on the new opportunities that information and communication systems provide to us. To get a better idea of how this society might approximately look like, it is useful to discuss the Swiss system, which comes closest to my imagination of how the Participatory Market Society might work.

As we know, the Swiss system works pretty well. Some of the remarkable particularities and success principles of Switzerland are: it is federally organized; it is built on great science and good education; it is based on basic democracy, where people can vote on substantial matters (including not to increase holidays or not to reduce taxes, as the voters have surprisingly decided!); it's a society that allows several languages and cultures to coexist; it is based on a consensus-oriented and, therefore, other-regarding decision-making tradition; it has a rotating presidency to avoid accumulation of too much power in the hands of one person or party; it has a well-maintained public infrastructure and a fantastic public transportation system; and it has a low debt level compared to other industrialized countries. In a sense, I expect that this system will be further improved, by generalizing it to economic activities, by using new opportunities offered by information and communication systems, and by exploring even better mechanisms to create collective intelligence.

Finally, note that the self-organization approach is conservative in the sense that it builds on proven and tested success principles of our societies and on core cultural and ethical values (see also Information Box 3). By promoting other-regarding behaviors through the consideration of externalities, it helps us to create more sustainable systems, to preserve our environment, and to make our society more resilient. This is reached by enabling our society to better adapt to our changing reality, i.e. to technological change, environmental change, demographic change, etc. But what if we prefer our society to stay as it is? Can we preserve our current society, or get back to how it was before? I wish we could: many of us had a good time in the past! But this is a very romantic dream, and a very dangerous one, because we can't stop our economy and our societies from progressing. And we couldn't really want to stop its progress, because we would miss out the new opportunities that some other countries would surely use to gain competitive advantages. Why would we want to fall back behind others, if we could be leading this development?

Cities as agents of change

Developing the above thoughts further, what does it mean for the governance of our increasingly complex world that we need to engage more into distributed, bottom-up approaches? It suggests that, besides trying to find global solutions through institutions like the United Nations, we would have to build complementary institutions based on local entities, namely cities and regions. In fact, for many years, we haven't been able to negotiate binding global agreements to reduce climate change, and it has also been impossible to solve a number of other problems. Maybe, a bottom-up approach could be more effective at times?

In fact, more than 50 percent of all people in the world are now living in cities, and the fraction is steadily growing. Cities are the places were the problems occur, and where the solutions are created. They are the places where pollution and crime happens, and where innovations and goods are produced. Cities are also the places that are most threatened by disasters. Thus, our efforts to increase societal resilience need to focus on them.

It is, therefore, worth listening to what the previous chief city planner of New York City, Alex Andros Washburn, has to say in his book on the Nature of Urban Design. Interestingly, there is no master plan for New York City, the leading metropolis of the 20th century. Instead, there is a steady little-by-little adaptation to the needs of the respective neighborhoods. Washburn underlines how important it was that he was able to influence everything, while he controlled nothing. In the first place, urban change requires listening, he says, and he adds that public space is where you build public trust, by bringing all sorts of people together. To make the city more resilient and simultaneously meet quantitative, qualitative, and natural needs, top-down and bottom-up processes must intimately play together, pretty much as I have discussed it in the previous chapter. The same can be said about the "virtual cities" in the Internet, i.e. the communities that have formed in the digital world. To create trust, transparency is important there, too.

City Olympics to improve the world

Going a step further, I believe that digital communities and cities can be important agents of global change. It will be the competition and collaboration among cities, which can bring us forward in our attempts to solve the 21st century challenges. If we manage to find ways to make our cities smarter, this will make our planet smarter. In this way, acting locally will cause a global change to the better. For example, I have recently proposed that we might come up with something like “City Olympics” to address global problems such as climate change (see video).

Calls to counter climate change are often seen by companies and citizens as opposing our preferred ways of life, and that is why they find so little support. However, doing something for our climate could be fun and rewarding, if we would run climate-oriented City Olympics every few years. These would be events with a sportive spirit, where cities all over the world engage in a friendly competition for the best science, technology, and architecture to counter climate change. They would also compete for the greatest citizen engagement (in terms of environmental-friendly mobility, investments into renewable energy technology, better thermal insulation, and more). These events could be presented by the public media in pretty exciting ways. Furthermore, after each Climate Olympics, there would be a cooperative phase, where the best ideas, technologies and urban governance concepts would be exchanged among the participating cities, thereby allowing them to make faster progress. Which city, which country will have reached its climate goals first? Let's be ambitious! While we may dislike regulations that tell us what to do, we love competitions, and we love winners!

In a similar way could we address other global challenges. This would just change the kinds of disciplines in which cities would compete. It also seems natural that cities form global networks with other cities struggling with similar problems. Exchanging knowledge, ideas, technology and experts, or supporting each other when disasters strike will reward such global networks of cities that are glued together by similar challenges and interests. Why shouldn't we have an alliance of cities that takes the lead in supporting better, climate-friendly technologies? Just suppose cities next to raising ocean lines, such as New York City, Singapore, London, Hamburg, Sydney, and a few others would start this together. Wouldn't that create first mover advantages, which would soon let others follow?

Just a thought: regions rather than nations?

Note that the principle "think global, act local" can be implemented not only by creating global collaboration networks of cities. It might also be good to have governance structures building on regions. In many cases, global negotiations between nation states don't lead to agreements within a reasonable amount of time. This is often because they are acting selfishly on their own behalf, sometimes equipped with veto powers. So, what if, besides top-down political decision-making institutions we would build bottom-up decision-making institutions such as a council of regions? This might often find solutions that are better adjusted to local needs and would provide more space for local cultures and diversity. We might even have top-down and bottom-up approaches working towards the same goals in parallel, finally implementing the first or best solution found. Such competition would be good!

To have a strong legitimacy, regional representatives should be elected directly by the people in each region, and to avoid political casts, every grown-up citizen should be an electable candidate, independently of whether he or she belongs to a political party or not. Moreover, it would promote integration if every citizen above a minimum age living in a region would have the right to vote there, no matter whether born in that region or an immigrant. Remember that lack of participation is one of the most important factors causing conflicts.

To solve problems that have trans-regional relevance, the corresponding regional parliaments could send representatives for a limited time into trans-regional and global councils established to address specific problems. After all, these representatives would know best how to serve the needs of the people they are representing. To ensure flexibility and avoid accumulation of power and corruption, the global representatives of the regional parliaments could rotate every few months, or have a mandate for certain subjects only, or both.

How to master our future: some actionable proposals

In the past years, I have been talking to a lot of people, and many of them expect that there are major changes ahead of us. There are many signs of a destabilization of our world, and global conflict or war might be the result, because the powers that have dominated the 20th century are struggling to keep their influence. But if we want to manage a smooth transition into a better future, we must innovate not only what we are doing, but also how we are doing it, and how we think about the world. In particular, we need to learn an interaction- and system-oriented thinking.

People expect that governments act on their behalf, but this doesn't mean that governments should increasingly interfere with their lives and try to micro-manage them. In fact, citizens are calling for more opportunities to take decisions that concern themselves. New opportunities for this are just emerging: information and communication systems increasingly allow for a participatory decision-making and coordination of activities.

Now, given that we will probably face a major change in the way our economy and society are organized, how can we get there smoothly, from where we are today? Below, I will make some actionable proposals to start with.

Improve systemic resilience. Most global or large-scale networks – and networks of networks even more – are prone to highly damaging cascade effects. To protect ourselves from the vulnerability of our critical infrastructures and their essential functionalities, modular design principles, as they are established in management science, are very important. To get there, we must do at least two things: First, we need to make sure to build in "shock absorbers" or "engineered breaking points," which can effectively stop cascades by decoupling different parts of the network. Note, however, that the specific design of shock absorbers and engineered breaking points strongly depends on the particular kind of system. Therefore, an interdisciplinary solution approach is needed. Whenever diverse perspectives on a problem exist, the collaboration between different stakeholders is needed, typically involving independent representatives from politics, business, science, and the citizens. It would, therefore, be useful if, besides professional politicians, independent qualified citizens would be represented in the respective decision-making bodies as well (usually for a specific task and for a short time period).

Reduce laws and regulations such that it supports diversity and its many positive side effects. I have shown that diversity is the basis of societal resilience, collective intelligence, cultural evolution, and the happiness of people. Diversity is also the motor of innovation and economic well-being. Thus, the complaints of companies about over-regulation and of citizens about the prevailing attempts to standardize and homogenize their cultures, lives, and cities, must be taken seriously, otherwise great projects such as the European Union may fail on the long run. We should try to combine the strengths of different cultures rather than making them all the same. Copying the leading economic system is not the best solution. (Remember the section on the Netflix challenge.) Therefore, the way to go is as follows: Give each law, apart from the constitutional principles, a limited term of validity. Avoid over-standardization and create opportunities. Allow different systems of self-organization to coexist and compete with each other. Importantly, when trying to reach high social or environmental standards or similar goals, don't fix a single best practice solution, but offer a choice of 2 or 3 best practice solutions (in the very best sense of pluralism), such that countries, cities, and companies have options to choose from, in favor of a locally and culturally fitting implementation. This will increase diversity and resilience, as there will be not just one solution, but several. It will also increase the support for these laws.[6] Finally, in many cases, compulsory regulations can be replaced by guidelines, thereby, helping everyone to improve established practices.

Build a reputation system to promote awareness, quality and responsible action. If we reduce the number of laws and regulations, we need to replace them by something else. More freedoms can be given, if decision-makers behave in more responsible ways. Suitable merit-based and reputation systems can promote awareness, quality and responsible action. They are able to support cooperation and social order in an efficient and effective way. In fact, we see the quick spreading of reputation systems in the Internet for a good reason: they are extremely useful. They help to promote better services to customers, and allow providers of services and products to sell better quality at a higher price. However, reputation systems should be improved such that they have the following features: manipulation attempts and information pollution should be sanctioned; facts, advertisements, and opinions should be distinguished; anonymous, pseudonymous and personal ratings should be possible, but given different weights; reputation and recommender systems should be community-specific, pluralistic, and based on multiple criteria rather than trying to make everyone apply identical quality criteria; users should be able to choose, configure, create and share information filters and recommendation algorithms.

Rebalance top-down and bottom-up decision-making according to the principle of subsidiarity. We should build information systems enabling everyone to take better-informed decisions and more effective actions. This will empower people to contribute to the management of our systems in a bottom up way, thereby enabling solutions that are better fitted to local and diverse needs, using local competence and knowledge. Altogether, we will increasingly see the principle "You should do this!" replaced by "I can do something that needs to be done!" We should also create information platforms that support the coordination of such activities as well as the self-regulation of communities, where many conflicts of interests are resolved through a self-organized system of community moderators, considering the externalities of decisions and actions. Those community moderators will serve to judge and support the compliance with local rules, while staying within the framework of our constitutional principles. The temporary role of community moderators in the judgment hierarchy should depend on their previous merits, assessed both in a top-down and bottom-up way in terms of respecting fundamental principles and local rules well.

Establish a new data format based on the data cord principle to enable informational self-determination and micro-payments. I have pointed out that some of the problems with the Internet as we have it today are related not only with issues of security and cybercrime. They mainly result from a lack of user control over their personal data, from a lack of accountability, and from difficulties to reward companies and people easily and properly for the data, ideas and cultural goods they have produced. I think that all of these problems could be solved by a combination of a Personal Data Store (i.e. a personal mailbox for data) with special encryption techniques and a new kind of data format based on the concept of a "data cord," which connects contents with the respective producer or owner and allows them to control the access to their data.[7] In case of personal data, the related person should be considered the owner, and he or she should be able to control the rights of use of third parties. Furthermore, a Micro-Payment System should enable related multi-dimensional value exchange. Then, the more often data are copied or used, the more (material or immaterial) profits will be produced and automatically shared between the different instances of the value-generating chain. Such a Micro-Payment System would be superior to current intellectual property right (IPR) approaches such as software patents. Current IPR approaches stand in the way of an efficient co-evolution of ideas, which has been the underlying success principle of human culture.[8]

Create a multi-dimensional complementary and backup money system to make our financial system more functional and resilient. We have seen our financial system to be more fragile than we thought, and we cannot exclude it will collapse one day. It is therefore essential to establish a backup money systems, which can step in and keep up economic exchange in case our current system fails. I, therefore, plea for a multi-dimensional exchange system. This would create a welcome competition with our current financial system, which would help it to improve. In fact, we currently see peer-to-peer payment and lending systems coming up. If they meet certain quality standards and serve public interests (such as providing loans to companies for the sake of investments), governments could support the development of such systems, for example, by a special tax status and less regulations (given there is no "too big to fail problem"). The current payment systems (including BitCoin) are not perfect, but allowing for more competition will let our financial system improve.[9] I have also pointed out that a one-dimensional reward system does not allow our complex socio-economic systems to self-organize well. For this reason, a multi-dimensional reward system is needed. Multi-dimensional money could provide such a system. It could be imagined like having several bank accounts for different kinds of use.

Engage in information infrastructures and measurement methods to determine and charge externalities. For self-organization to work well, it is further important to quantify externalities of decisions and actions, and to charge negative ones to the person or company producing them. If everyone has to pay for damage created, this will largely help to reduce the frequency and size of damage in the future. For the sake of symmetry and fairness, one may also reward people and companies for positive externalities. An important step is therefore to build an infrastructure that is able to measure and quantify damage to our physical and biological environment, but also to our socio-economic system (such as "social capital"). This can now be done with the sensor networks underlying the emerging "Internet of Things," and it will be important to increase awareness and responsible behavior.

Tax systemic risks and provide rewards for transparency, responsibility, data access, informational self-determination, and open innovation. Besides charging actually incurred damage, it would also make sense to charge likely socio-economic damage ("systemic risks"), as insurance companies would do it with risks caused by individuals. In the past, we have often had business models that lead to "tragedies of the commons" or that undermine privacy, pollute the web with spam, or advertise products and services in ways that are barely distinguishable from user ratings and facts. For the time being, until we have figured out better ways, taxation might help us in a relatively simple and straight-forward way to improve our techno-socio-economic systems. Rather than taxing labor more than profits that are made by monetary investments or robotic production, one might consider to tax excessive numbers of interactions, wherever too many interactions might have undesirable systemic impacts. This would encourage to simplify or decouple complex systems, to increase their resilience, and to collect Smart rather than Big Data (i.e. to discourage the collection of huge quantities of data that are of limited use and often quite problematic in many ways). So, it might be worth considering to progressively tax the number of network links, but also a lack of openness, transparency, participatory opportunities, or informational self-determination. Such taxation could reward local interactions and the provision of high-quality data, but encourage a forgetting of old and irrelevant data. Moreover, one should further promote the generation of participatory information systems that can benefit everyone. Concretely, one should use the money created in the before mentioned way to pay for public information infrastructures and institutions for the digital era to come – in order to quickly build an Information Ecosystem that can benefit everyone. In other words, suitable kinds of taxation could reward desirable and responsible innovations and private activities contributing to them. Let me, finally, stress that such taxation should not stand in the way of an Open Data and Open Innovation approach, and that it should not be based on a surveillance kind of system. Free and open data of high quality should be tax exempt. In this context, it is important to remember that the additional economic value, which can be created by Open Data, has been estimated by McKinsey to be of the order of 3,000 to 5,000 billion dollars per year in the world. It would be great if everyone could get a share of this cake!

Build the infrastructures and institutions for the Digital Society. I believe that, so far, no country in the world is well prepared for the digital era to come and the new principles governing it. Therefore, it would make sense to engage in an Apollo-like program, and the equivalent of a Space Agency for Information and Communication Technology (ICT): an Innovation Alliance with a mission to develop institutions and information infrastructures for the emerging digital society. This is crucial to master the challenges of the 21st century in a smart way and to release the full potential of information for our society. It is instructive to recall the factors that enabled the success of the automobile age: the invention of cars and of systems of mass production; the construction of public roads, gas stations, and parking lots; the creation of driving schools and driver licenses; the establishment of traffic rules, traffic signs, speed controls, and traffic police; and the invention of safety-enhancing technologies such as guardrails, anti-blockage systems (ABS), and airbags. All of this required many billions of investments each year. We invest a lot of resources into the agricultural sector, the industrial sector, and the service sector. But are we investing enough in the emerging digital sector? While the digital revolution certainly creates new challenges to our societies, it also opens up many promising opportunities to master our future. What do we need to make the digital age a great success? First of all, we need to engage in building trustworthy, transparent, open, and participatory ICT systems, which are compatible with our values. For example, it would make sense to establish the emergent "Internet of Things" as a Citizen Web. This would enable self-organizing systems through real-time measurements and a public information platform that I call the "Planetary Nervous System." It would also facilitate a new kind of search engine. To protect privacy, all data collected about individuals should be saved in a Personal Data Store and, given the agreement of the corresponding users, processed in a decentralized way by third-party Trustable Information Brokers, allowing everyone to control the use of their sensitive data. A Micro-Payment System would allow data providers, intellectual property right holders, and innovators to get rewards for their services. It would also encourage the exploration of new and timely intellectual property right paradigms. A pluralistic, User-centric Reputation System would promote responsible behavior in the virtual (and real) world. It would even enable the establishment of a new, multi-dimensional value exchange system, which would overcome weaknesses of the current financial system by providing additional adaptability. A Global Participatory Platform would empower everyone to contribute data, computer algorithms and related ratings, and to benefit from the contributions of others (either for free or for a fee). It would also enable the measurement, protection and production of Social Capital such as trust and cooperativeness, using next-generation User-Controlled Social Media. A Job and Project Platform would support crowdsourcing, collaboration, and socio-economic co-creation. Altogether, this would build a quickly growing Information and Innovation Ecosystem, unleashing the potential of data for everyone: business, politics, science, and citizens alike. We could also create a Digital Mirror World to assess the likely risks and opportunities of prospective decisions by means of sophisticated computers simulations. This would help us to identify suitable institutional settings and interaction rules for self-organizing systems. Finally, Interactive Virtual Worlds would allow us to unleash the full potential of creativity and self-organization within different socio-economic settings and Intellectual Property Right approaches. Finally, Social Information Technologies would help us to cope with the diversity resulting from this and to benefit from it.

Build a new educational system that prepares people for the digital age to come and for creative work. It becomes increasingly clear that most of our current institutions and jobs will fundamentally change. Much of the work, which has been performed by people in the past, will be done by computers, algorithms, or robots in the future. This applies particularly to procedural and rule-based work. Hence, many people will instead have to find work in the information- and knowledge-creating sector, including the area of cultural production. Rather than a standardized education, we will need a more personalized education and training in creativity. I imagine that the fundamental skills would encompass language skills, mathematical skills, and programming skills; the ability to find and critically judge information, to curate it and to use it for knowledge production; the skill to share knowledge, collaborate with others, and to co-create services and products, considering their externalities; the ability to concentrate on tasks, but also to flexibly adapt to new opportunities; last but not least, the skill to analyze and understand complex systems and to apply an interaction- and systems-oriented thinking. Digital literacy and good education will be more important than ever. But with the emerging "Internet of Things" and participatory information platforms, we can unleash the power of information and turn the digital society into an opportunity for everyone. It just takes our will to establish the institutions required to make the digital age a great success. Are we ready for this?

Let's get started!

Of course, governments could bring this on the way, and they should! The spending on wars in the past 10 years exceeded 1 trillion dollars. Instead, we could have used this money to build a basis for the Digital Society of the future. Why not aid people by good information, thereby allowing them to take better decisions? For this, providing information of high quality is key, and that requires openness and transparency. Additionally, participatory opportunities can create new value and trust. Citizens have become part of our global information system. They should now be able to contribute to the collective intelligence needed to solve the ever more complex problems of our world. A new deal on data should treat citizens as first-class partners in exploring the opportunities of the future and mastering our challenges.

However, independently of whether politicians will support self-organization approaches or not, companies will learn to create more efficient systems and make money with them. That's just the logic of automation implied by the digital revolution. As self-organizing systems spread, this will sooner or later also change the way we govern the world. Advances in information and communication technologies will drive this process. But the citizens can drive it, too.

Given that Instagram was built by 13 people and WhatsApp by around 50, it becomes clear that a few people can now have global-scale impact. Moreover, note that Wikipedia has a lot of contributors, and OpenStreetMap is now supported by 1.5 million volunteers. Thus, citizens don't have to wait. They can take action themselves. With future information and communication technologies, we can change the world to the better! We can build a Citizen Web, a user-controlled Internet of Things, ourselves. We can measure externalities. We can create an OpenCulture Wiki, collecting information about the rule sets that make diverse cultures succeed. We can build Social Information Technologies to understand each other better and interact more successfully. We can run information platforms, where data, algorithms, and information filters are shared. And we can create a global maker community, producing our own products.

Thanks to the digital revolution, almost everything seems possible, now. It's not utopia or science fiction anymore. We are just limited by our own imagination, and our will to co-create our future. Do you want to be part of it? Then, follow the FuturICT blog and social media, join the nervousnet community (nervousnet@ethz.ch), and contribute to a trust- and respectful, participatory society, using the power of information!

INFORMATION BOX 1: From a Big Data society to a self-organizing society

A participatory and resilient society needs a sufficiently distributed management of complex systems, based on bottom-up self-organization. In many cases, the self-organization approach can be nicely embedded in the institutional frameworks that we have today, as novel information and communication technologies add new opportunities. For example, a self-organized community management may complement our court system. In other cases, we will find inefficient institutions to be increasingly replaced by better institutional settings.For self-organization to work well, information must be locally available and manageable. This requires informational self-determination and can be realized with the concept of a Personal Data Store. Note that informed consent to collect personal data is not enough. To exercise our constitutional freedoms, we must be able to determine who can access and use what personal data for what purpose. This does not necessarily mean that we can have data deleted or changed as we like (if the data is not factually wrong), but we could make certain categories of data not viewable to others (e.g. health data, and this would also mean that it wouldn't be allowed to infer health-relevant personal information from other data). Public authorities might, of course, have additional access rights, but solely on the basis of transparent laws and procedures.In all uses of Big Data, high ethical standards have to be applied. Complementary, one needs efficient technical, cultural, and legal protection from misuse of data and discrimination. For this, it is important to contrast unfavorable perspectives with favorable ones (e.g. "in dubio pro reo"). This applies not only to legally relevant uses of Big Data, but also to business cases. Good quality control mechanisms must make sure that the scientific state-of-the art is applied. For instance, only statistically significant results should be taken as basis of favorable or unfavorable personal treatments (e.g. the classification as a "bad risk"). Furthermore, to avoid massive discrimination, the fraction of people considered "bad risks" should be very limited.One of the best means to reach all this would be to ensure a sufficient transparency of data-related procedures. Furthermore, the anonymization, encryption and decentralized storage of personal data is strongly recommended to minimize misuse and unintended use. Much of the above still needs to be put in place. So far, we are still lacking proper institutional settings for the digital era to come.

INFORMATION BOX 2: Future governance: options rather than compromises

It would certainly raise satisfaction to have a governance approach where decisions are taken by those who will be affected by the decision, no matter whether this is on a local, regional, national, supranational, global, company, or community level. In principle, we could enable such decision-making by means of electronic participatory voting platforms. Individual points of views could be integrated by an argument map such as debate graph into a reasonable number of options (perspectives). If decisions are not taken in a basic-democratic way (which can be done only for a limited number of key questions), these different options should be all properly represented in the decision committee. The relative number of votes should depend on the respective externalities. Moreover, I would like to suggest that, the more diverse a community is, the larger should the committee be. This applies particularly to a committee that is supposed to resolve global issues. Let's assume we have various options or communities i. Then, each of it could be represented by a*ln Wi people, rounded down to integer numbers, where ln denotes the natural logarithm, and Wi stands for the contribution made to the common good to be created, e.g. the taxes to be paid or the externalities suffered from the respective decisions. Finally, a is a constant that determines the overall size of the committee. I also think that, to establish a new regulation that would apply to all, one should require a high level of support (ideally of the order of two thirds of all votes). Usually, this could only be reached by not just setting a single, homogeneous standard everywhere, but by providing a few best practice options, among which the companies or regions could decide. This would make the desire to have some standardization compatible with the desire to have options and opportunities that are locally and culturally fitting. In other words: self-organization means to create options rather than compromises for everyone. This can embrace the innovative power of diversity and also the collective intelligence that will be the basis of successful Digital Societies in the 21st century.

In this book, I have argued that we need to allow for diverse sets of rules in order to enable a large variety of functionalities, but also to allow companies and people to experiment and find better rule sets. Nevertheless, it would be favorable to share a number of fundamental principles with each other in the world – a guiding rule set small enough that everyone can remember it, and from which many things, including peaceful co-existence, would follow.As I have demonstrated before, in a strongly connected world, maximizing the own payoff does not produce the best results. To avoid undesirable systemic instabilities and tragedies of the commons, superior principles than self-regarding optimization are needed. The following set of fundamental rules is the result of extensive discussions I have had with many people. The similarity with principles promoted by philosophers and world religions are not by chance. It is clear that these ethical principles have been the fundament, on which the success of societies has been based for thousands of years. As I pointed out before, these cultural principles are more persistent than steel and more powerful than wars. They also create Social Capital, which is a basis of economic well-being, too. The rules below particularly consider the problems implied by complex interdependencies, strong interactions, and the increasing importance of information, which are characteristic of today's world.

Respect: Treat all forms of life respectfully; protect and promote their (mental, psychic and physical) well-being.

Diversity and non-discrimination: Support socio-economic diversity (including diversity-preserving uses of Information and Communication Technologies). Engage against discrimination or repression and against a punitive society; give priority to rewards.

Freedom: Support the principle of informational self-determination; respect creative freedom (opportunities for individual development) and the freedom of non-intimidating expression; abstain from mass surveillance.

Participatory opportunities: Enable self-determined decisions and offer participatory opportunities and good options to choose from. Engage in properly balancing the interests of all relevant (affected) stakeholders, particularly political, business and citizen interests.

Quality and awareness: Commit yourself to honest, high-quality information and good practices and standards; support transparency and awareness.

Fairness: Avoid negative externalities that are directly or indirectly caused by own decisions and actions, or fully compensate the disadvantaged parties for them (in other words: "pay your bill"); reward others for positive externalities.

Protection: Engage in the protection from harm, damage, and exploitation; stay away from aggressive or war-like activities (including cybercrime, cyberwar, and misuse of information).

Resilience: Reduce the vulnerability of systems and increase their resilience.

Compliance: Engage actively into the protection of these ethical principles and in the compliance with them.

To summarize the above even shorter, the most important rule is: Be other-regarding and pay the fair price for your externalities. This fundamental principle takes care of the implications of our interactions, and it's probably enough to create a better world that will benefit everyone! Mastering our future isn't that complicated, after all!

[1] I would perhaps start to believe in this approach, if the Silicon Valley, and the area 100 kilometers around it, was a perfect world for all the people living there, but it's far from this. There is a lot of light, but a lot of shadow, too.

[5] The issue is that each new rule implies adaptation costs, but these are very diverse. Some have lower-than-average adaptation costs, and these are the beneficiaries of the new rule. In case of many rules, there are only a few players that happen to benefit most of the time, while others have relative disadvantages. As a consequence, introducing many rules implies a large degree of inequality.

[6] A broader support of laws can be often reached by increasing the number of options allowed.

Monday, 19 January 2015

This is the introduction chapter to my forthcoming book. In previous weeks I have published excerpts of various chapters. Your critical thoughts and constructive feedback are very welcome see footnote below[1].

Smartphones, tablets, and app stores with almost unlimited possibilities have become symbols of the digital revolution. However, while all this makes our lives more comfortable and interesting, these innovations pave the way for much more fundamental transformations.

They concern the way we learn, decide, act and interact. Big Data, the Internet of Things, and Artificial Intelligence in the background will create smart homes, smart factories, and smart cities, but not only this: our entire economy and society are likely to change dramatically. What are the opportunities and risks related with this? Are we heading towards digital slavery or freedom? What forces are at work? And how can we use them to create a smarter society? This book offers the reader a guided tour into a new world, the digital society ahead of us. We can already see the signs of change and entirely new trends...

While we have been busy with our smartphones, the world has secretly changed behind our backs. In fact, our world is changing ever more quickly, and much of that change is being driven by developments in Information and Communications Technologies (ICT). These technologies – such as laptop computers, mobile phones, tablets, and smart watches – seemed to be about convenience. They came along as tools enabling us to calculate, communicate, and archive with greater speed and efficiency than ever before. But there was little recognition though that, one day, they would facilitate not only our cultural discourse and institutions, but potentially reshape our entire world. Large-scale mass surveillance, the global spreading of Uber taxis, and the Bitcoin crypto-currency are just a few of the irritating symptoms of the digital era to come.

For decades, the progress of Information and Communication Technologies has been characterized by Moore's law: an explosive increase in processing power. Today, the average mobile phone is much more powerful than the computers that were used to send the Apollo rocket to the moon. And there is an even faster increase in the data volumes produced. Thanks to powerful "machine learning" methods, information systems are also becoming ever more intelligent.

Should we care? Isn't it just great that computers do calculations for us more quickly than we can do them ourselves? Isn't it fantastic that our smartphones help us to manage our agendas, and that Google Maps tells us the way to go? Why not ask Apple's Siri to recommend a restaurant? I certainly don't object any of these functionalities, but this is just the beginning of what's going to come.

Exposed to an abundance of data, we will face new scarcities – for example: time and attention. While in the past, we often didn't have enough information to make informed decisions, we now have an overload of information. To cope with this situation, we will need information filters, "digital sun glasses," however this makes us vulnerable to a manipulation by the creators of these filters. Secrecy and privacy might get also lost, and with this, we may lose values of security, mercy and forgiveness.

The digital revolution is changing the way we learn, behave, take decisions, and live. It also alters the way we produce and consume, and even property and ownership. Information is, in fact, an interesting resource: it can be shared as often as we like. One doesn't have to divide it and, therefore, we wouldn't have to fight for it. This will, of course, depend on how the future economy is organized, in particularly, how we reward people and companies for the production of data, information, knowledge, and creative digital products. The currently negotiated free trade and service agreements (such as TTIP, CETA, TPP and TISA) may try to perpetuate the principles of the 20th century, or open the door for a smarter 21st century society. As the negotiations are secret, we can only guess, what will happen, but if we don't pay attention, we might miss an opportunity that emerges only every 100 years. In this book, I will try to describe the options we have, and how we can take our chance.

It is really important to realize that the digital revolution is not just about more powerful computers, smaller smartphones, and fancier gadgets. The digital revolution will not only change our personal lives; it will transform our economy and society, too. In fact, in the coming 2 or 3 decades we will see dramatic changes. A lot of production and services will be automated, and this will fundamentally change the way work looks like in the future. Two decades or so from now, i.e. pretty soon, less than 50 percent of people will have jobs in the classical economic sectors, for which we have been trained (i.e. agriculture, industry, and services).

In terms of hardware, computers may surpass the human brain already very soon. Our brain, with its approximately 100 billion neurons, a firing rate of 200 per second, and a signal speed of 120 meters per second currently has to compete with supercomputers having 100 times less transistors, but operated 20 million times faster, while the signal speed is 2 million times faster. Computers already beat the best players in games like Checkers, Chess, Backgammon, or Scrabble. They can even beat the best players in quiz shows such as Jeopardy! And they can do real-time translations between dozens of languages. Experts predict that computers will be able to perform each single task better than humans in 5 to 10 years, and reach brain-like functionality within 10 to 25 years. Watch this TEDx video to get an idea of what learning computers can presently do:

Many great digital services, such as real-time language translation, have become possible only by the use of Big Data. Without any doubt, there is currently a great hype about this. Therefore, Dan Ariely compared Big Data with teenage sex: "everyone talks about it, nobody really knows how to do it, everyone thinks everyone else is doing it, so everyone claims they are doing it..." But some are actually doing it, because the use of Big Data has already given birth to many interesting applications. Thus, what is "Big Data"? The term is used for massive amounts of data collected about techno-socio-economic-environmental activities. Every single minute, there are 700,000 Google queries and 500,000 Facebook posts. Add all the location data of people using smartphones, all the shopping data, and whatever leaves data traces on the WWW, then you have an approximate idea of "Big Data."

As I will discuss later, Big Data opens up entirely new optimization and business potentials. It's, therefore, no surprise that everyone suggests Big Data to be the "Oil of the 21st century," a new way of making money – big money. The consultancy company McKinsey estimates that Open Data alone can create an additional value of 3000 to 5000 billion dollars annually worldwide.[2] On average, this would be more than 700 dollars extra for every citizen of the world. Therefore, the potential of Open Data would probably exceed the value of the free trade and service agreements currently under negotiation, such as TTIP, CETA, TPP, and TISA (see Wikipedia for information). Given these numbers, are we setting the right political and economic priorities? This is something we should pay attention to, because it will determine our future.

Coming back to what one can do with Big Data, Google Now is a particularly interesting application. It's a digital assistant that makes use of your personal data, if you register for this service. For example, if there is a traffic jam on the way to your next appointment: no problem, you will be told to start, say, 15 minutes earlier. But where will such digital assistance lead to? Will we end up in a golden digital cage, a "filter bubble" as Eli Pariser calls it? Will we just end up doing what smart devices tell us to do? Modern learning software already corrects us when we are making mistakes. Smart wristbands and eye trackers can discover when we are tired or stressed, and computers can figure out, when our performance is going down. It's quite possible that we will soon be patronized by digital personal assistants and lose our position as self-determined decision-makers and most intelligent species on Earth.

Given all the data one can now accumulate, could governments or big companies build "God-like," almost "omniscient" information systems and decide like a "wise king," taking optimal decisions for everyone? Could such a "benevolent dictator" overcome coordination failures as well as irrational and partial decisions? Would it become possible to create a "perfect world"? By collecting all the data in the world, could one build a digital "Crystal Ball" to predict the future, as some people have suggested? And if this were possible, given that "knowledge is power" as the saying goes, could one build a "Magic Wand," i.e. an information system enabling a government or company to keep the plan of a "benevolent dictator" on course? What would this take? It would certainly require an information system that, based on massive personal data, knows us so well that it can manipulate our decisions and actions with personalized information presented to us.

But isn't this already happening? An Internet search quickly reveals that there are several softwares, projects, or even companies (including Recorded Future and Palantir), which are committed to creating something like a Crystal Ball. There are also so-called Cybermagicians who try to manipulate the Web and Social Media, as The Intercept and The Guardian have reported, based on materials that Edwards Snowden has leaked. Is personalized advertisement just an exercise to develop this system to perfection? Don't Google or Facebook know already what we are interested in, placing ads that fit exactly our interests and tastes? Doesn't Amazon suggest us what to buy? Doesn't Trip Advisor suggest us what destinations to visit, and what hotels to book? Doesn't Google recommend us whom to follow and Facebook, who to be friends with? And aren't there apps suggesting us whom to date? Would we still find our way through our lives without Google and all these smart personal assistants? And what if we didn't follow their advice? Would an insurance company punish us for eating unhealthy food? Would a bank offer us bad conditions for a loan, because we are living in the wrong neighborhood? Or would we get restricted offers or pay higher prices, because we are not fitting certain expectations? While this might sound like a dystopian science fiction fantasy, much of this is actually happening already.

Of course, some people might say: if this increases the efficiency of our lives, or at least of our economy or society, why shouldn't we do this? Isn't the main point of history books that society keeps changing? So, why should we care, if companies and governments take care of us? The question is: are they doing a good job caring of us? And can they do a good job at all in the way we are currently using Information and Communication Technologies today? Are we heading towards a state of society where everyone is taken care of well (some might call it "paradise")? Or are we running into deep trouble? How would a smarter, digital society have to look like? Could a government or a company, with all the data of the world, run our complex world in an optimal way? Or may we unintentionally slip into an evil regime, where we are "enslaved" by means of intelligent Information and Communication Technologies, based on surveillance systems that are combined with sophisticated punitive and reward schemes? These are the kinds of questions I will ask in this book.

In fact, we are at a crossroad. We must consider very carefully how to make the genie of digital technologies work for us, not against us. We have the choice between a future, in which everyone's decisions and actions are controlled from the top down by powerful information systems, and a future, characterized by bottom-up participation, creativity, and diversity.

This book offers a framework of concepts and ideas that could contribute to a smarter and more resilient Digital Society. Such a framework is needed, because in many important respects, the world has become pretty unpredictable and unstable. Some of the reasons for this can be identified clearly. Much of it has to do with the increasing interdependencies in and between our systems, often driven by advances in Information and Communication Technologies. Now there is perhaps too much data, too much speed, too much connectivity, and too much complexity.

The complexity dilemma

Globalization and technological progress have enabled the global exchange of people, goods, money, and ideas. In addition, humans have created an amazing amount of networking and interdependency. In fact, we have networked most of our computers and a large fraction of all people in the world. Now, the "Internet of Things" – an extension of the Internet, in which computational devices communicate with humans and among each other – is connecting smartphones, TV sets, fridges, coffee machines, and other things. Will this improve the stability of our world or create new kinds of vulnerabilities and threats? It depends on how we organize and use these systems!

As we are networking our world, its complexity is surpassing our capacity to understand it well. Interaction strengths have increased, and the rate of change of our world is outpacing our ability to adapt. Every year, politicians pass more laws and regulations, but the established and straight-forward way of solving problems increasingly fails to manage the problems humanity is faced with: September 11, the wars on Afghanistan and Iraq, the world financial and economic crisis, the Arab Spring, the wars in Syria and Ukraine, or the wide spreading of Ebola witness that we are rather losing than gaining control of what happens in the world. One could add many more examples. On May 6, 2010, a flash crash caused a sudden drop of the financial markets with temporary losses of almost 1000 billion dollars. The Internet, on which we all depend, is also becoming less and less secure, it seems. Cybercrime is exploding, and cyberwars are becoming a scary threat to the world – perhaps more dangerous than nuclear wars. Estonia, Syria, and North Korea, for example, have already suffered from large-scale Internet blackouts.

I fully recognize that many politicians and business leaders are working hard to do the right things. But are these efforts always effective? It often seems that the established models and approaches work increasingly less. This, in fact, is a result of the complexity of the systemic interdependencies we are faced with. But if we want to fix these problems, goodwill is not enough. In case of systemic instabilities, no matter how well skilled and informed the actors are, a loss of control will happen sooner or later, despite best intentions to avoid this. As a consequence, one may run into a vicious circle, where one has to spend a substantial fraction of time on fixing problems created before.

How do we escape this vicious circle? We must go to the roots of the problem. For this, we need a much better understanding of complex dynamical systems. Based on this, we must change our current approach of designing and controlling systems. We must shift our attention from the components of a system to their interactions. When the interactions become strong, they often create counter-intuitive results and unstable systems.

How can we win the battle against this ever-increasing level of complexity? It’s both a symptom and a potential saving grace that we have much more information about our world than ever before. The amount of data doubles every year – which is to say that every year we produce as much data as in the entire history of humankind. So, is the collection of massive data about our world the solution to our problems?

Mining Big Data can certainly support evidence-based decision-making. Without any doubt, it can open up entirely new potentials for business, politics, science, and citizens. But the accumulation of socio-economic data often implies privacy issues and a number of other problems, which raises fundamental ethical questions. For example, what undesirable side effects does Big Data have? Does Big Data undermine human rights? Do we need new safety precautions, something like digital guardrails and digital airbags? How would these look like? Do we need to own the data collected about us? Should we be able to manage our personal data? Should citizens have more or less control? How to redistribute authority and responsibility without creating chaos? And how will this eventually change our economy and society?

Furthermore, how will the future Digital Society be organized: more top-down than today or more bottom-up? Do we need a powerful state to create a well-organized society, as Thomas Hobbes (1588-1679) suggested it, or will the principle of the "Invisible Hand," for which Adam Smith (1723-1790) is known, be the superior approach for the Digital Society to come? Will democracies turn into "democratorships," in which people will have nothing to say and no real participation? And would democratorships be justified by the socio-economic benefits derived from Big Data?

Or is there an alternative and perhaps better approach, based on distributed control? Many examples, ranging from traffic to production to crowds and beyond, demonstrate that it is indeed possible to manage complex systems in a bottom-up way, such that the outcomes are beneficial. What are the general principles behind such a "self-organization" approach? Is there a tool set allowing each of us to navigate our complex future, enabling us to create a stable and thriving Digital Society? Is collective intelligence the answer to the combinatorial complexity of our globalized world, and how would it work?

Rather than trying to control and fight the self-organized dynamics in complex systems such as our economy, financial system, global trade, transport and power networks, can we harness the underlying forces to our benefit? Can we modify the ways in which the basic components of these systems interact? Can we let desired outcomes emerge by self-organization, in a manner akin to the “Invisible Hand” that Adam Smith imagined to govern our economy and societies? Can bottom-up self-organization create well-ordered, effective, efficient, and resilient systems?

While self-organization has been shown to work in complex technological systems such as traffic control or industrial production lines, can it work in socio-economic systems, too? After all, society isn't a giant clockwork. Things there are more subtle than in a technological system, because people won’t necessarily follow the rules producing a desired behavior or outcome in a self-organized way. To enable successful self-organization, we also need suitable compliance mechanisms: incentives to ”do the right thing.” In fact, social norms build on social sanctioning systems, and our economy on financial reward systems. Now, there are also novel ways of bringing compliance about, such as digital reputation systems, as used by eBay and many others.

Can self-organization outperform conventional top-down control in managing complex dynamical systems? If yes, what would it take? How to find suitable institutional settings and interaction rules? How to get the real-time data enabling adaptive feedback mechanisms, such that the system is automatically driven to the desirable state? Would the emerging "Internet of Things" with its underlying sensor networks make socio-economic self-organization possible? Would these data allow us to detect emerging "social diseases" such as crime, war or financial crashes, before they break out, and help us to heal them? Could one enable everyone to take better-informed decisions? And how to build suitable information systems for this? These are some of the questions addressed by this book.

On the way to a smarter digital society

It seems that, from the personal level to the functioning of governments, markets and economies, information and communication technologies have produced an accelerating rate of change in our societies, and nobody is currently able to control the effects. We are experiencing nothing less than a “third economic revolution,”[3] leading to the "Economy 4.0." Its effects will be at least as profound as those of the first (agrarian to industrial) and second (industrial to service) revolutions. The ubiquity of digital technologies such as the Internet and World Wide Web, social media, portable digital devices, artificial intelligence and robots – is driving the birth of a Digital Society.

The signs of this change are everywhere, from automated market trading to the use of robotic systems in military combat, from the role of social media in revolutionary movements to the transformation of the world economy. We can no longer afford to just watch this societal transition. We must prepare for it and take decisions. But we should not see it simply as a threat to social and global stability. In fact, we are facing the biggest moment of opportunity in the past hundred years. Our networked, information and communication technologies enable entirely new solutions to the world's problems, and they could take our civilization to the next level: the Digital Society.

I guess nobody doubts that information and communication technologies will be changing our world. Everyone starts talking about "smart homes," "smart factories," "smart grids," and "smart cities." It's just logical that we will have a "smart economy" and a "smart society" as well. But how will the digital revolution reshape our socio-economic institutions? And who will finally be right: Thomas Hobbes or Adam Smith? What will be the smarter digital society? One that is organized in a top-down way or one organized in a bottom-up way? Can the organization of the smart (electricity) grid be a model for the organization of future information and communication systems? Will a centralized organization of the power grid be better or a participatory system of electricity generation, as it is currently built in Germany and other European countries? Talking about society, will a centralized system as in Russia or China win on the long run, or will a distributed, federal system be superior, as we have it in Germany or Switzerland?

While addressing such questions, I am trying to pursue an apolitical approach, which is neither oriented left nor right, but forwardly directed. I am analyzing socio-economic trends and the technological, social and evolutionary forces at play. The technological "forces" include Big Data, the Internet of Things, and Artificial Intelligence. I also attempt to judge the implications of these forces, particularly the opportunities and risks associated with them. I will further show that it would be little successful to oppose these forces. We can benefit the most, if we learn to use these forces for us, in the same way as we learned to let the forces of nature work for us.

This book will try to explain how we can use the digital revolution to make our society more innovative, successful, and resilient, by applying the new logic of the digital era to come. It will explain how to enable real-time adaptation, using just emerging information and communication technologies. It will describe tools to gain knowledge about our world, to increase awareness, and to take better-informed decisions. And it will sketch how to build an information and innovation ecosystem that could create new jobs and opportunities for everyone.

We are now ready to dive into the details of why our world is troubled and how we can fix it – by using advanced information and communication systems in new ways. The following chapters will focus on subjects such as prediction and control, complexity, self-organization, tools supporting awareness and coordination, protection and responsible decision-making, real-time measurement and feedback, mechanism design and system exploration, innovation, reward and exchange systems, co-creation and collective intelligence. I hope this journey through the opportunities and risks of the emerging Digital Society will be as exciting for you as it was for me!

Finally, why did I write this book and how did it come about? My research activities, on which this book is based, had three essential triggers. While I studied statistical physics in Göttingen, Germany, I specialized on modeling complex systems and got increasingly interested in addressing real-life problems, such as the conflicts between neonazis and left-wing students that were looming in town at that time.

Later, when I was Managing Director of the Institute of Transport & Economics at Dresden University of Technology, the beautiful historical city of Dresden and a huge area around it were hit by a major flooding in 2002, which drew my attention to studying disasters and how to respond to them.

Finally, when I worked as a professor of sociology at ETH Zurich, during the financial crisis in 2008 one thing became obvious to me: we needed entirely new ways of thinking about socio-economic systems in order to master the subsequent economic crisis, political extremism, and increasing level of societal conflict that would result from it.

Therefore, I started to launch the FuturICT initiative back in 2010 (see www.futurict.eu). This was a response to a European call for two 1 billion EUR "flagship" projects aiming to strengthen Europe's innovation in the information and technology sector. So, we are talking about real big money here. The project aimed to create new science and technology to manage our future in an increasingly complex world. In particular, FuturICT wanted to develop a "Living Earth Simulator" that would allow one to explore and better understand the likely opportunities and risks implied by decisions one might take. This simulator intended to be an open and participatory platform committed to the protection of people's privacy and not a closed project aimed to predict everyone's future, as some people claimed.

FuturICT was recognized as highly innovative project, bringing the best researchers in the social, natural, and engineering sciences together. Eventually, we had established interdisciplinary research communities in more than 25 European countries, in the USA, Japan, Australia and many other countries. Far more than 100 academic institutions and a similar number of companies wanted to be partners of the project. About 90 millions of co-funding were promised for the first 2.5 years.

However, leading the FuturICT project also turned out to be an adventure. Big players all over the world got interested in the project. The USA quickly launched Big Data research programs amounting to 150 Million Dollars or more. China broadcasted a movie about the project on national TV, watched by hundreds of millions of people. Russia sent three big TV teams to feature the project. Moreover, in its Christmas edition 2011, the Scientific American presented FuturICT as no. 1 world-changing idea on its title page.

Months later, the FuturICT project got into the very final round, but contrary to everyone's expectations, it wasn't funded. At this point in time, I started to worry that governments might run into a digital arms race rather than building the global, participatory information and communication system that FuturICT had proposed. Therefore, I wrote the article "Google as God?" to make the public aware of the dangers of information and communication systems.

Afterwards, I made an Internet query for "Google as God?," and I was surprised to find results such as the "Church of Google." While these were perhaps not meant to be serious, they are still interesting food for though. At this page you can find 9 proofs that Google is God, for example: "Google is the closest thing to an Omniscient (all-knowing) entity in existence" or "Google is everywhere at once (Omnipresent)" or "Google can 'do no evil' (Omnibenevolent)". Therefore, my book is exploring these ideas further and asks, how realistic they might be in the future.

When I talk about a "Crystal Ball" or "Magic Wand," a "wise king" or "benevolent dictator," I use them as abstract concepts. I don't have a particular company or institution such as Google, the NSA, or a possible Artificial Intelligence in mind. Nevertheless, we must ask, whether we could run into a digital nightmare even if all Big Data companies and institutions had the very best intentions? And, if yes, what could we do to minimize the risk of such a scenario? In other words, what institutions and technological solutions does the Digital Society need? How much decentralization and how much encryption are required to ensure sufficient Internet security? How much transparency and informational self-determination is needed to avoid "digital slavery" and ensure "digital freedom"?

For sure, if we want to succeed in the future, we must better understand the new world we are currently creating – a world that is characterized by more data, more processing power, and more connectivity. In my book, I intend to explain the functional principles of this new world, and how we can turn them into our advantage. However, when I wrote it, I found that we are at a crossroads, where we might take the wrong way by mistake – a way that would lead to more instability and potentially to global-scale disaster.[4]

In fact, our world might be at great risk. I will discuss the reasons for this in the chapter on the Complexity Time Bomb. When this concept came to my mind, I first could not believe it – it sounded just too fantastic. I had analyzed a variety of complex techno-socio-economic systems and discovered that many of these systems got out of control when the interaction strength between the system components got too high. So, the question was, how would the dynamics of an increasingly networked and interdependent world change?

I came to the conclusion that, even with the best technology ever, huge amounts of information, and the very best intentions, our world might turn uncontrollable. The best analogue is probably a bomb, which explodes as a result of chain reactions, when a "critical mass" is exceeded. It turns out that, in socio-economic systems, similar kinds of "explosions" exist, too. They are much slower, but similarly destructive – think, for example, of a political revolution. Therefore, I was wondering, whether our global system had unintentionally become a "global time bomb," and if yes, whether it was already ticking?

I certainly don't
want to worry you, but history tells us what the results of such explosive
socio-economic processes can be. This includes political instabilities and
regimes that might be unjust and cruel. It is important to avoid similar
scenarios by developing a better understanding of the causes of "societal
diseases" such as crime, war and financial crises. In this book, I try to
provide a new and integrated perspective of how society works, and how we can
use this knowledge to master our future. In fact, I believe we shouldn't be
pessimistic. We should rather take the future into our own hands, because we
can make our society more resilient to crises and change the world for the
better!

Acknowledgments

I would like to dedicate this book to Dietmar Huber for the incredible support he has given to me over so many years. I would also like to thank the FuturICT community for the many inspiring discussions and everyone, who was patient with me, including my parents and whoever might have reasons for complaints. Last but not least, I am very grateful to Philip Ball, Stefano Bennati, Anna Carbone, Andreas Diekmann, Dietmar Huber, Eoin Jones, Richard Mann, Heinrich Nax, Evangelos Pournaras, Kay-Ti Tan, and others for their valuable feedback on the manuscript and the many improvements (but don't hold them responsible for the content of this book).

FootNotes

Photocredit http://www.ecoist.ch/

[1] Dear Reader, thank you for your interest in this chapter, which is thought to stimulate debate. What you are seeing here is work in progress, a chapter of a book on the emerging Digital Society that I am currently writing. My plan was to elaborate and polish this further, before I share this with anybody else. However, I often feel that it is more important to share my thoughts with the public now than trying to perfect the book first while keeping my analysis and insights for myself in times requiring new ideas.

So, please apologize if this does not look 100% ready. Updates will follow. Your critical thoughts and constructive feedback are very welcome. You can reach me via dhelbing@ethz.ch or @dirkhelbing at Twitter.

I hope these materials can serve as a stepping stone towards mastering the challenges ahead of us and towards developing an open and participatory information infrastructure for the Digital Society of the 21st century that would enable everyone to take better informed decisions and more effective actions.

I believe that our society is heading towards a tipping point, and that this creates the opportunity for a better future.

[3] see, for example, Jeremy Rifkin, The Third Industrial Revolution: How Lateral Power is Transforming Energy, the Economy, and the World (Palgrave Macmillan, 2013).

[4] And that's why I sometimes reflect critically about current trends. But my intention with this is to provide better orientation, in the same way as I expect from my team members to criticize me if they don't agree, because it helps me to develop a more differentiated view and take better decisions.

FuturICT Hubs

Followers

FET Flagship Initiative

The activities leading to these results has received funding from the European Union Seventh Framework Programme (FP7/2007-2013) under grant agreement n° 284709 - project 'FuturICT', a Coordination and Support Action in the Information and Communication Technologies activity area